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The European Securities and Markets Authority has published on February 17 a Question and Answers document on the Alternative Investment Fund Managers Directive, with the aim of promoting common supervisory approaches and practices in the application of the AIFMD and its implementing measures.

ESMA says the Q&A document has been compiled to offer responses to questions from the general public and national regulators regarding the practical application of the directive. Although primarily intended to ensure that regulators' supervisory activities are in line with the authority's guidance, the answers are also intended to help alternative fund managers by providing clarity about the AIFMD rules, rather than creating an extra layer of requirements.

Because the Q&A mechanism is a convergence tool for promoting common supervisory approaches and practices under Article 29(2) of the ESMA Regulation, formal consultation on the draft answers is considered unnecessary, although ESMA may discuss them with representatives of its Securities and Markets Stakeholder Group, other consultative groups or external parties.

The authority says it will continually edit and update the Q&A as and when new questions are received, and review the document regularly to determine whether there is a need to convert any of the material into formal guidelines.

The Q&A currently deals with five topics. ESMA says that while the AIFMD remuneration rules apply to an existing alternative fund manager from its date of regulatory authorisation, the directive's regime on variable remuneration applies only from the first full performance period after authorisation: the 2014 accounting period for firms approved between July 22 and December 31, 2013, and 2015 in the case of authorisation between January 1 and July 22, 2014. The determining factor is the manager's date of authorisation, not the date of application. The same principle applies to firms performing AIFMD activities for the first time after July 22, 2013.

Where an alternative fund manager delegates portfolio management or risk management activities, ESMA says contractual arrangements to prevent circumvention of the remuneration rules need apply only to identified staff of the delegate entity that have a material impact on the risk profiles of the fund portfolios managed under the delegation, and only in respect of remuneration applicable to the delegated management.

Where the delegate entity is subject to the Capital Requirements Directive rules on remuneration, as long as the particular staff in question are subject to the CRD rules, these are deemed as effective as those applicable under the AIFMD.

ESMA also clarifies that managers seeking to market new investment compartments of an existing alternative fund in a member state where the fund has been already notified must undertake a new notification procedure via their home regulator. In addition, where a non-EU manager reports information to an EU regulator under Article 42 (marketing of alternative funds under national private placement regimes), only funds marketed in that member state need be taken into account.